Xiaomi is moving to bring more of its electric vehicle supply chain in-house, establishing a new subsidiary to manufacture key components like motors and batteries.
Chinese technology giant Xiaomi is accelerating its vertical integration in the competitive electric vehicle market, establishing a new wholly-owned subsidiary with a registered capital of 10 million RMB to develop and manufacture motors, batteries, and other automotive parts.
The move comes as Xiaomi's first EV, the SU7 sedan, gains traction in the market, leveraging key technology from partners. "In China, select Xiaomi YU7 electric SUV models integrate our 1,200-volt EliteSiC M3e, enabling better performance and the longest range in this class," onsemi President and CEO Hassane El-Khoury said on the company's recent earnings call.
The new entity, Beijing Xiaomi Jingxu Technology, is indirectly wholly-owned by Xiaomi Communications, according to Chinese corporate records. The 10 million RMB ($1.4 million) registered capital is a starting point for the firm, whose business scope officially includes motor manufacturing, battery manufacturing, and the manufacturing of automotive parts and accessories. This follows a trend of EV makers seeking greater control over their core technology and supply chains.
By investing in its own manufacturing capabilities, Xiaomi aims to reduce its reliance on third-party suppliers, potentially lowering production costs and securing its supply of critical components amid a volatile global market. This vertical integration could be crucial for improving profit margins and competing with established players like Tesla and BYD in the long term, especially as a fierce price war continues to define China's EV landscape.
A Strategic Play for Supply Chain Control
The decision to manufacture core components in-house is a well-worn path for leaders in the electric vehicle space. Companies like Tesla and BYD have demonstrated the significant advantages of vertical integration, from cost efficiencies and supply chain resilience to the ability to rapidly innovate on core technology. For Xiaomi, a relative newcomer to the auto industry, establishing Jingxu Technology is a foundational step toward emulating that successful model.
While the initial 10 million RMB investment is modest, it signals a clear long-term strategic intent. Controlling the production of high-value components like electric motors and battery packs is critical for managing the bill of materials and protecting margins, a key challenge for all players in China's hyper-competitive market.
Leveraging Partnerships While Building Independence
Xiaomi's move toward independence does not mean it is abandoning its current partners. The company's collaboration with semiconductor firm onsemi is a case in point. Onsemi's CEO highlighted that his company's China revenue grew 23 percent sequentially in the second quarter, driven by silicon carbide demand from new EV ramps like Xiaomi's.
This indicates that for the foreseeable future, Xiaomi will likely pursue a dual strategy: leveraging the cutting-edge technology of established suppliers for current-generation vehicles while simultaneously developing its own in-house capabilities for future models. This approach allows Xiaomi to compete on performance today while building a more self-reliant and cost-effective manufacturing base for tomorrow. The establishment of Jingxu Technology is the first concrete step in that long-term journey.
This article is for informational purposes only and does not constitute investment advice.
